Anticipates

Promotes

Business challenge story

Green economy development

Cao Yin, Founding Partner and Chief Architect of Energy Blockchain Labs, summarizes the scale and scope of his organization’s mission in decidedly ambitious terms. “We want to create a new energy ecosystem for the people, by the people and of the people. We want to make a different kind of green energy, much cheaper for people all over the world, not only in China.”

China is responsible for approximately one-quarter of the world’s carbon dioxide emissions. Building a viable green economy and reducing emissions is no easy task, however, primarily because the cost of renewable energy is high—especially when compared with fossil fuel prices. The root cause of renewable energy’s high cost, according to Cao, is related to inadequacies in the country’s market mechanisms.

For instance, it’s difficult to establish a centralized marketplace for green energy because of China’s geographic immensity and widely dispersed energy production and distribution points. Moreover, traditional market mechanisms in China aren’t suited to the nature of green energy production and consumption. “You cannot control the sunshine or the wind. Also, you cannot predict how many electric vehicles will be charging in a particular district at a particular time,” says Cao. “All that randomness leads to an imbalance between the supply and the demand, which increases the cost.”

To reduce emissions and green energy costs, the government established Carbon Emission Reduction (CER) quotas, which allocate carbon emissions limits to enterprises and individuals. The CER quotas, in turn, prompted growing trade in carbon assets, also known as “carbon offsets”—accounting mechanisms by which high-carbon emitting enterprises can buy the equivalent of their reduction quotas from low-emission enterprises and use those funds to invest in more green technology.

Lin Le, Chief Executive Officer (CEO) of Energy Blockchain Labs, saw that blockchain technology could bring a new level of efficiency to carbon asset trading, helping expand the market and its environmental benefits. “Right now, it takes more than 10 months on average to successfully develop a carbon asset, with other process inefficiencies adding even more delay. Blockchain is ideally suited to streamlining and fortifying those processes.”

“IBM Blockchain brings trust, innovation and efficiency to our carbon asset development…an important milestone for China in the era of big data.
”

—Lin Le, Chief Executive Officer, Energy Blockchain Labs Inc.

Transformation Story

A carbon trading platform

Working with IBM, Energy Blockchain Labs created a carbon asset development platform to help organizations more easily comply with the government mandated CER quotas. IBM Blockchain technology is the foundation, providing a general, immutable distributed ledger that closes the data gap between green economy and finance. “We are expecting to be the first global blockchain platform that is dedicated to carbon asset development,” says Cao. “The ability to create immutable transactions on blockchain helps ensure that the data is traceable, transparent and visible in real time to all stakeholders. The entire carbon trading process becomes more sharable as well, which naturally streamlines it.” Thus far, Energy Blockchain Labs has compiled more than 200 carbon asset development methodologies into smart contracts, a blockchain feature that automates the calculation of quotas for enterprises that need to reduce emissions.

Energy Blockchain Labs integrates the carbon asset development ledger with a broader universal distributed ledger—also based on IBM Blockchain technology—that records and quantifies the environmental impact of participants’ energy production and consumption activities; helps store that information securely; and provides transparency to all stakeholders. As a result, participants can easily track their carbon footprint and better understand when to buy or sell in the carbon asset market. And regulators can more easily monitor progress against quotas to ensure that participants meet carbon reduction goals. “We built a seamless data bridge between the green economy and all of its stakeholders, including the emission enterprises, governments, local governments, central governments, carbon asset exchanges, third-party inspections and certification bodies, companies, and of course, finally, the expert commissions,” says Cao.

Energy Blockchain Labs is also developing two other energy applications, a decentralized power trading ledger and an E-Vehicle green electricity trading system. Further, the company has organized an industry consortium in China to jointly research, develop and deploy distributed ledger services in energy scenarios.

Results story

Faster carbon asset development

In the first phase of the IBM Blockchain platform project, both Cao and Lin expect to cut the average 10-month carbon asset development cycle by 20 – 50 percent. They also anticipate substantial efficiency gains in the green market, with carbon assets moving to market faster as the distributed ledger facilitates collaboration, improves transparency and traceability, and eliminates errors in transmission and processing. And as the organization’s use of IBM Blockchain technologies matures, carbon asset development time periods and economic costs will fall even more.

More important, however, are the potential big-picture, long-term benefits. By creating a more efficient means of carbon asset development and trading, the Energy Blockchain Labs solution helps reduce carbon emissions and simultaneously channels greater investments to green energy initiatives. “Through any number of characteristics, from data immutability, transparency and traceability to its effectiveness as a platform for collaboration, IBM Blockchain brings trust, innovation and efficiency to our carbon asset development,” Lin says. “It represents an important milestone for China in the era of big data; it’s key to achieving economic prosperity and allowing Chinese enterprises to generate carbon assets consistently in order to tackle global climate change.”

About Energy Blockchain Labs Inc.

Based in Beijing, China, Energy Blockchain Labs is setting up a general distributed energy ledger to remove the data gap between the green economy and finance. The company positions itself as the global leader in digitalized green assets and is working to improve the efficiency of the carbon emissions reduction market.

Take the next step

To learn more about the IBM Blockchain platform, please contact your IBM marketing representative or IBM Business Partner, or visit the following website: ibm.com/blockchain